02.07.202516:33:36UTC+00Mexican Peso Holds Strong

The Mexican peso has stabilized at 18.76 per USD, close to its highest point of 18.74 in August 2024, which was observed on July 1st. This stability comes as the US dollar remains weak, with investors evaluating strong external financial inflows and a supportive domestic monetary policy environment. The decline of the dollar gained momentum following an unexpected loss of 33,000 jobs in June's ADP report, which prompted a reassessment of potential Federal Reserve rate cuts. Concurrently, Mexico reported a $1.03 billion trade surplus in May, attributed to a 1.8% increase in non-oil exports, despite a significant 35% drop in oil exports. Additionally, remittance inflows reached a historic high of $5.5 billion. These inflows, along with the central bank's decision on June 26th to reduce the key interest rate by 50 basis points to 8%, while indicating further cuts would only occur as inflation decreases, have strengthened confidence in the peso and maintained an attractive real interest rate. Domestic employment indicators remain strong, with unemployment at a mere 2.7%. Even though the manufacturing PMI dropped to 46.3 in June, it still performed better than most of Latin America.